A number of major banks in Europe and the United States have opposed a set of strict rules targeting crypto holdings.
JPMorgan Chase and Deutsche Bank are among the financial institutions that are opposing the new rules that would require them to set aside a dollar in capital for every dollar of Bitcoin they own.
The rules were proposed in June by a group of global central bankers and regulators known as the Basel Committee for Banking Supervision (BCBS).
The Global Financial Markets Association, which includes the two banks and 5 industry associations, published a letter this week, according to reports. In it, they argued that cryptocurrencies such as Bitcoin should not face such strict capital requirements.
1,250% Crypto Risk Factor
Banking regulators have cited the same tired reasons for their continued crypto scrutiny: money laundering and terrorism financing.
The banks and trade associations argue that the harsh rules would prevent them from holding crypto assets which would push activity into unregulated markets.
“We find the proposals in the consultation to be so overly conservative and simplistic that they, in effect, would preclude bank involvement in crypto asset markets,”
When the rules were originally proposed in June, the Basel Committee, which includes the U.S. Federal Reserve, the European Central Bank, and other major central banks, said banks should apply a 1,250% risk weight to Bitcoin.
It added that this is “similar in effect to the deduction of the asset from the capital,” which means that if a bank holds $100 in BTC, it would have a risk-weighted asset value of $1,250. The minimum capital requirement for banks is 8%, so this means they would have to set aside at least $100 in cash.
The banking organizations opposing the rules also objected to the committee’s inclusion of stablecoins which also have marginal fluctuations. They stated that the rules risked them falling under the same capital requirements applied to Bitcoin.
Regulatory Pressure Mounts
Stablecoins have come under increasing scrutiny this year as their combined market capitalization surpassed $100 billion. In an interview this week, Securities Exchange Commission chair Gary Gensler likened stablecoins to casino chips:
“These stablecoins are acting almost like poker chips at the casino right now,”
Anti-crypto senator Elizabeth Warren has also been ramping up the rhetoric, though clearly misinformed. Last week she said the high Ethereum transaction fees could “wipe out investors,” and her office didn’t know the difference between leading DeFi lending platform Maker DAO and Ethereum’s first major project, The DAO, which was exploited in 2016.
Coinbase Adds Support for Two Ethereum-Based Altcoins Across All of Its Platforms
Top US crypto giant Coinbase is adding two Ethereum (ETH) powered altcoins to its arsenal of tokens.
After their initial launch on Coinbase Pro, BadgerDAO (BADGER) and Rarible (RARI) are now available to buy, sell, convert, store, send and receive on the company’s retail trading platform Coinbase.com and its iOS and Android applications.
BADGER is a decentralized autonomous organization (DAO) with the purpose of building infrastructure and products that help spur Bitcoin’s growth as a usable asset across other blockchains.
At time of writing its BADGER governance token is trading at $28.47, down by 7.5% on the day according to CoinGecko.
RARI is the token that powers digital artist and creator community-owned non-fungible token (NFT) marketplace Rarible.
Rarible is a non-custodial platform, meaning users always have control over their tokens, which are not held by Rarible. So far, the Rarible marketplace only supports Ethereum-based cryptos.
At time of writing, RARI is trading at $23.49, down 4.6% on the day according to CoinGecko.
Both altcoins recently surged in price after they were added to Coinbase’s professional trading platform.
Binance to Support the Incoming Polkadot Parachain Slot Auction
- Binance exchange will support the Polkadot (DOT) parachain slot auction.
- The company plans to start the event in November, this year.
- Doing this will help Polkadot achieve its ecosystem development.
Amid the waves blowing around the incoming Polkadot (DOT) parachain slot auction, Binance exchange has also announced that they are ever-ready to support the Polkadot’s parachain event.
With this synergy, Binance emphasized that it will soon start its Polkadot parachain slot auction program mainly in November 2021. Additionally, the month set to begin the event by the Binance team moves in line with the proposed Polkadot parachain slot auction date.
Meanwhile, Binance didn’t officially give the exact day and time that it will start the event. At the moment, the only news we have is that the team aims to start the parachain event in November.
To clarify, Binance intends to do its part and what it can to help influence Polkadot towards achieving its ecosystem development milestone. In turn, doing this will also push up the growth and adoption of the Polkadot parachain slot project to the mainstream.
Also, for further info about the event, the Binance team noted that they will keep their eyes on it and provide the community with more updates.
Until then, the team assured that the community should expect a separate announcement in no time and more details than what they have disclosed now. In addition, Binance advised that the community should stay tuned as they are bringing more initiatives ahead.
CFTC slaps Tether and Bitfinex with $42.5 million fine over misleading statements
- Tether is hit with $41 million in fines to settle allegations of misleading statements.
- Bitfinex was fined $1.5 million for facilitating retail transactions for American citizens.
- Tether has been under the lens of financial regulators over claims of stablecoin reserves for years on end.
Financial regulators have investigated Tether and Bitfinex for criminal probe into bank fraud and misleading statements. Currently, over $62 million worth of Tether is in circulation, which is likely to impact the broad cryptocurrency market.
Tether and Bitfinex hit by CFTC fines; there may be an impact on the crypto market
US regulators have accused Tether of making untrue or misleading statements. The Commodity Futures Trading Commission (CFTC) slapped a penalty of $41 million on Tether and $1.5 million on Bitfinex.
Bitfinex was fined for allowing American citizens to transact on its exchange. The CFTC announced the penalties earlier today.
Tether has played a key role in the crypto ecosystem, and the US Justice department’s focus is on the stablecoin’s activity in nascent stages following its launch in 2014. Federal prosecutors investigated transactions that were linked to crypto, and banks were unaware of their nature.
Former probes remained confidential, according to sources close to the Department of Justice (DoJ). A criminal probe is one of the key developments in the crackdown on cryptocurrencies by regulators.
Over $62 billion worth of Tether tokens are in circulation; proponents believe it is too big to fail. In a statement, Tether stated:
Tether routinely has an open dialogue with law enforcement agencies, including the DOJ, as part of our commitment to cooperation and transparency.
In light of recent events, however, Tether is faced with a more significant challenge, safeguarding the interests of the crypto community by not failing. Traders across fiat-crypto exchanges and peer-to-peer platforms exchange their fiat for stablecoins to access the cryptocurrency ecosystem.
If Tether fails, the inflow of stablecoins to exchanges could be impaired, triggering a drop in capital inflow to Bitcoin.
In their concurring statements, CFTC was quoted:
The settlement with the Tether respondents finds that there were misrepresentations regarding the assets backing tether, specifically that the USDT tokens were backed 1-to-1 by US dollars. The evidence establishes that this assurance provided to tether customers was not 100% true, 100% of the time.
Tether officials are held accountable by the CFTC. Further, the CFTC has applied a commodities’ definition to stablecoins. Regulators are concerned that enforcement actions may confuse their role in cryptocurrency and stablecoin regulation.
The CFTC’s statement reads:
In a recent speech, SEC Commissioner Hester Peirce asked an important question when it comes to the US regulators’ review of stablecoins: Are we fighting for investors or are we fighting for jurisdiction? This question is front-and-center in my mind as I consider these settlements.
Tether believes that,
As Tether represented in the Order, it has always maintained adequate reserves and has never failed to satisfy a redemption request.
Tether has suggested that the CFTC’s findings regarding Bitfinex are related to its activities before December 2018. The stablecoin issuer is focused on resolving the matter and moving forward.
The statement reads as follows:
We are grateful that the market has consistently demonstrated its trust and confidence in Tether. We will continue to earn that confidence and lead the industry in innovation and transparency.